Public Relations: Expense or Profit Center?

I love creativity. I love visionaries. I love new ideas. I love David (not Goliath). I love PR. I love you for reading this…

What I do not love is when people (visionaries, the underdog, creative types) launch companies without a thought given to marketing. I find this so confusing and heart breaking because there are millions of resources available (blog, books, business coaches), and yet, companies launch, money is spent, time invested – but not dime nor dollar for marketing.

I do not always advocate PR only approaches – some companies need straight up sales marketing. I get that. But doesn’t everyone want to have an eye on their public, even if they decide to sink their life savings into a direct mail piece? The reality is that at some point, 99.9% of businesses have to put some money where their mouth is and pay for decent marketing.

“If you build it they will come”is a movie line, not a marketing strategy.

How Much Does Public Relations Cost?

Too many entrepreneurs want short cuts, freebies, and miracles. I am amazed by the number of business people I have met who truly believed they did not need to spend one dollar on marketing or PR because the product/idea/service was so great, it would simply sell itself. I have met business owners who spent half a million on a whim acquiring space, renovating it, stocking product and setting up shop without budgeting anything for marketing, advertising or promotion.

I have seen the same businesses flounder or worse, fail. “Why, why, why,” I cry to the heavens, “did that person not budget for marketing?” Did they not have a real business plan? Are they arrogant? Or did they simply think promoting their business through real communication with their customers was free?

Well, to tell the truth, I still have no idea why this happens, but I can say that if you want to succeed, you will need to shell out a few clams. I am not saying you have to hire me, but you need to hire someone or do it yourself. Need some help, but are not sure of the numbers? I have done the easy math for you. And brace yourself, they all have commas.

Straight from Salary.com, here’s what it will cost you to hire a Public Relations Director as a full-time employee (this does not include office space, supplies, taxes or benefits): $84,000 to $185,000, with the national average being over six figures.

Now, let’s just say you live in a tiny town; you might get away with hiring a PR person for $40,000 in salary alone. At the very lowest range, that is about $19 per hour. So why do some people expect to pay $400 for a full “campaign” (yeah, I am talking to you Elance lovers)?

I understand shopping on price – but you have to pay something – and you won’t like this, but when it comes to PR, you get what you pay for.

But never fear, here’s my unscientific formula that any business can use to figure out how much engaging a proper agency/consultant will cost (full-time employees are different, generally less – so please feel free to stimulate the economy by hiring a PR pro.)

Jules’ Rules for Budgeting PR Agencies & Consultants:

Set aside 10% of your annual sales for engaging a PR firm.

Add the salary of your lowest paid employee and your highest paid employee, divide the sum in half, and use that amount to budget for a consultant.

Find the median cost of your attorney, accountant, and one other professional services provider (architect, engineer, graphic designer) and use that as a pay basis when you start talking to professionals.

For a consulting fee, find the rate of a similar (size, scope, situation) full-time employee and double the hourly rate.

Note: If you do not have any employees, an attorney or an accountant, take the amount that you want to pay, double it, multiply it by three, then add 20%, while saying a Hail Mary.

If you find any of this unsettling, call me. I won’t charge you. And we can talk about that part in the movie where he does build it and they do come. It won’t help your marketing, but it might make us both feel better.

11 thoughts on “Public Relations: Expense or Profit Center?”

I feel like the student who is desperately trying to become the Teacher’s Pet by frantically shaking my right hand in an exaggerated parade wave while holding my right arm up with my left. And I’m completely comfortable with that.

I’m looking forward to seeing what the PR Road Show CEOs have to say about this, but it’s safe to say communications is ALWAYS the last hired and first fired. A lot of comms programs at colleges and universities fold their PR offerings into integrated marcom programs, thus depriving future practitioners of the experience engendered in learning the PR process from tip to tail. It speaks to a dearth of good PR programming in these comms programs, in some slices of corporate America and in nonprofits, who tend to be so busy staying afloat they avoid the PR problem altogether. PR pros have a training and mentor problem at schools and throughout organizations.

Hallelujah! I found myself nodding my head, saying “yes!” several times when reading this post. 🙂 Why DO so many entrepreneurs undervalue marketing? I loved your tidbit about wanting a full campaign for $400 too. As marketing professionals, we’ve all experienced that type of client all too often!

My favorite personal story was the client who asked when *exactly* their press release was going to be published so that they could be sure to “man the phones” that were obviously going to be ringing! Ummm….I hate to be the voice of reality, but one release is probably not going to require extra man hours.

I love the “man the phones” story. I wish it was like that. I can honestly say that I have seen that with some luxury products that I worked on behalf of clients, but that was so rare and the outreach was really targeted. A well-placed story will cause the phones to ring, but, no generally just distributing the release is not a game changer.

Thanks so much for stopping by, Tara. It’s great to get feedback and support. If you could tell business people one thing about what you do, what would it be?

I completely agree with your blog. Once you think about the way things work and how everyone feels marketing, advertising and PR are not needed but once the business fails, it is one of the first things they realize. Over the time the mantra that if you build it people will come is completely false now. Places such as universities and hospitals are all places that people go voluntarily and even these establishments have PR and marketing divisions. I think the association with negativity towards the profession in general and the nature of people thinking a great idea will see is overshadowing what really makes a product or company successful. Paying an agency or hiring a consultant may not seem like an investment that companies need to make when they first start out, but it is one of the best investments they can make in order to be successful.
I am sure there have been exceptions. but it is not reality and that is not the way the world works. In order for a business or product to be successful the public has to be aware that it exists. A great idea can turn into a great investment with the right marketing efforts.

I love how you pointed out something that seems totally obvious, but that I didn’t think of: universities and hospitals are all places that people go voluntarily and even these establishments have PR and marketing divisions. Even in our “required” services we go to the companies that resonate with us, so for those that offer discretionary spending & activities, I would see it as more important to connect with buyers.

One of the best PR jobs I had was for a public water agency. There was no competition. People had to use us to get domestic water. There was zero incentive to win more customers…it was a water agency, we had to provide water to people within a specific geographic area. So, the scope and strategy for PR was completely unrelated to sales or winning customers. We were free to care about things like building a good reputation, having a dialog with customers and educating the community on water issues. Now, if a company that has guaranteed customers has full-time PR, why would a company that needs to develop a customer base not embrace PR? It’s interesting to me, but I see it daily.

Dear New Business Owner, Even if you don’t bring on a PR firm full time or hire someone dedicated to PR on staff, you MUST consult a PR specialist before launching your business. Even if it’s for a month or two, you will be amazed at how much you might miss in your story, your image, your values and your mission that will attract customers (and, hence, sales) to your organization. While many of us are “product” driven, we are also human beings and people look to associate themselves with the people at a company. Let a PR person help define and tell your story (trust me, you’re too busy with your product and operations, etc.). It will increase your sales and brand image out of the gate…

Everyone needs to listen to Mr. Zunich ;-). He’s got a really good point about people being human beings. I love a highly involved CEO, but it’s true, trying to do PR while managing teams, creating products and driving operations would put even the most creative organized executive over the edge.